Position Sizing Prompt
Calculates defensible position size from risk-per-trade, invalidation distance and real exit liquidity.
/ quick answer
Use for every position. Liquidity, not conviction, is usually the binding constraint on-chain. Calculates defensible position size from risk-per-trade, invalidation distance and real exit liquidity.
Calculate a defensible position size. Show every step of the arithmetic. Portfolio value: [VALUE] Max risk per trade: [%] Entry price: [VALUE] Invalidation level: [VALUE] Pool/venue liquidity depth: [DATA] Expected slippage in and out: [%] Existing exposure to this asset or narrative: [%] Compute: 1. Risk budget in currency terms. 2. Distance to invalidation as a %. 3. Raw position size from budget / distance. 4. Adjusted size after round-trip slippage and fees. 5. Liquidity cap: largest size exitable in one day under 3% impact. 6. Correlation cap: reduction required given existing exposure. 7. Final size = the minimum of the caps, stated in currency and %. 8. What happens if the invalidation gaps through — worst realistic loss. If any input is missing, state that a defensible size cannot be calculated.
Risk budget: $500 (1% of $50k). Distance: 14%. Raw size: $3,571. After 1.8% round-trip costs: $3,480. Liquidity cap: $2,100 (3% impact on a $700k pool). Correlation cap: already 22% in this narrative, so cap at $1,500. Final: $1,500 (3% of portfolio). Gap risk: a 40% overnight gap implies a $600 loss, above the stated budget — acceptable only if that is understood upfront.
What does the Position Sizing Prompt prompt do?
Use for every position. Liquidity, not conviction, is usually the binding constraint on-chain.
Which AI models work with this prompt?
It is model-agnostic: it works with any capable general model. Replace the bracketed variables with your own context before running it.
What output should I expect?
Risk budget: $500 (1% of $50k). Distance: 14%. Raw size: $3,571. After 1.8% round-trip costs: $3,480. Liquidity cap: $2,100 (3% impact on a $700k pool). Correlation cap: already 22% in this narrative, so cap at $1,500. Final: $1,500 (3% of portfolio). Gap risk: a 40% overnight gap implies a $600 los.
/ continue exploring
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The vocabulary this page depends on.
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- →Prompt Injection
An attack where hostile input hijacks the LLM's instructions, causing it to leak data or misbehave.
- →Copy Trading
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Related workflows
Turn this into a repeatable process.
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Related tool stacks
The tools that run it in production.
- →AI Trading Stack
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- →Crypto Trading Stack
Market data, charting, DEX access and a Web3 wallet — the minimum toolset for deliberate on-chain trade execution.
Related prompts
Reusable prompts for this job.
- →Trading Strategy Generation Prompt
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- →Crypto Market Analysis Prompt
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- →Trading Assistant Agent Prompt
System prompt for an assistant that drafts trade plans, argues against them, and never executes.
Related use cases
How people apply it, and what came out.
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- →Automate Trading Alerts
Encoding invalidation levels as automated alerts removed screen-watching and caught two thesis breaks the trader would have slept through.
- →Build An AI Trading Assistant
An assistant that drafts and attacks its own trade plans raised plan completeness to 100% and rejected a fifth of setups on liquidity grounds.
- →Get Token Alerts
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Comparisons & alternatives
Pick between the options.
- →Manual Trading vs Automated Trading
Manual trading adapts to context; automation enforces consistency. Most durable setups automate monitoring and keep judgement human.
- →CEX vs DEX
Centralised exchanges optimise for liquidity, fiat access and convenience; DEXs optimise for custody, permissionless listing and on-chain transparency.
- →DCA vs Lump Sum
DCA spreads entry over time to reduce timing risk and behavioural error; lump sum maximises exposure time at the cost of concentrated entry risk.
- →DeFi vs Traditional Finance
DeFi offers open access, composability and transparent rules; traditional finance offers legal recourse, insurance and stability.